SEBI/HO/MRD/TPD -1/P/CIR/2024/132 — THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992

CIRCULAR SEBI/HO/MRD/TPD -1/P/CIR/2024/132 To All Stock Exchanges All Clearing Corporations (Except Commodity Derivatives Exchanges and Clearing Corporations) Sir/Madam, Measures to Strengthen Equity Index Derivatives Framework for Increased Investor Protection and Market Stability Derivatives market assist in better price discovery, help improve market liquidity and allow investors to manage their risks better. Stock Exchanges and Clearing Corporations together provide the platform and products for trading in derivatives market, while ensuring online real time risk management, adequate surveillance , as well as smooth settlement of trades. The role of product offering, risk management , and surveillance by Stock Exchanges and Clearing Corporations is crucial in ensuring integrity of securities market ecosystem. This is particularly heightened in view of the changing market dynamics in derivatives segment in recent years , with increased retail participation, offering of short tenure index options contracts , and heightened speculative trading volumes in index derivatives on expiry day . Regulation 28 (2) read with Part–C of Schedule II of the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018 (SECC Regulations, 2018), considers Risk Management, Surveillance , and Product development functions of Stock Exchanges and Clearing Corporations as core functions. In addition, Clearing and Settlement is considered as a core function of Clearing Corporations . October 01, 2024 The Securities and Exchange Board of India Act, 1992 ("SEBI Act") , inter alia , mandates SEBI to protect the interest of investors in securities and to promote the development of, and to regulate the securities market, by such measures as it thinks fit. One of